Key Points
- The US House of Representatives has passed a bill to regulate the use of cryptocurrency in illicit financing.
- The bill proposes a governmental group to study cryptocurrency’s role in terrorism and money laundering.
The US House of Representatives has greenlit a bill concerning the use of cryptocurrency in unlawful financing. This bill was proposed by Representative Zach Nunn (R-Iowa) on July 22. The legislation’s aim is to form a governmental group that will investigate the involvement of cryptocurrency in terrorist activities and money laundering.
Enhancing Collaboration to Address Illicit Finance
This cross-party initiative is intended to boost cooperation between the public and private sectors in tackling illicit finance in the digital asset sphere. With the growing prevalence of cryptocurrencies as a payment method, Rep. Nunn highlighted the need to provide Americans with secure access while protecting them from security threats and unlawful financial activities.
Rep. Nunn stated that this cross-party bill would help the United States to tackle security risks and prevent illegal money laundering, while also protecting consumer choices for all Americans. He also stressed the need to collectively address these issues to “ensure the long-term integrity of digital assets.”
Broader Initiatives and Future Prospects
This bill mirrors wider initiatives that are friendly to the sector, previously seen in the House, like the Financial Innovation and Technology for the 21st Century Act (FIT21). However, the Senate has yet to show similar enthusiasm for crypto-related legislation.
In a House floor speech, Nunn described the legislation as “essential in strengthening America’s national security.” He stated it was crucial for “protecting [the nation’s] digital assets and ensuring the next generation of financial and internet technology is built right here in America.”
The proposed group, operating under the Treasury Department, aims to include experts from various fields, such as blockchain intelligence, research institutions, and fintech companies. Their mission would be to investigate crypto transactions and devise strategies to deter misuse by harmful actors.
According to Jaret Seiberg, a TD Cowen analyst, the bill is a response to crypto critics who demand stricter measures on money laundering. He suggests that this legislative action offers political leverage to counter criticisms directed at the crypto industry.
The bill’s introduction aligns with proactive industry efforts to earn support from Vice President Kamala Harris, particularly after President Joe Biden announced he would not participate in the 2024 Presidential race.
In April 2023, the U.S. Department of the Treasury emphasized in a report the weaknesses in decentralized finance (defi) that criminals exploit to move and launder illicit funds. These include many defi services failing to comply with anti-money laundering and counter-terrorism financing regulations, weak cybersecurity measures in some services, and inadequate regulatory frameworks in certain jurisdictions.
Reports from October also suggested that cryptocurrency may have facilitated funding for the Hamas attack on Israel, demonstrating how such transactions can bypass traditional banking systems.
